Income Protection insurance provides you with a monthly income benefit if you are unable to work in your own occupation through, accident, sickness or disability after a specified deferred period and will continue to provide the benefit until you are able to return to work in your job or until the policy end date which is generally retirement age.
There is no limit to the amount of claims which can be made throughout the policy.
The premium does depend on the deferred period chosen, which depends upon the number of weeks/months the employer would pay if you were unable to work in your occupation and also the level of savings you have available to cover your mortgage and/living expenses.
There is also usually a choice to opt for an age-costed policy where essentially the monthly premium payable increases each year with age. This can be on a guaranteed basis so you can see in advance what your future premiums will be or on a reviewable basis whereby this amount is reviewed on a yearly basis by the insurance provider.
Age-costed income protection policies are a good choice for a young professional who has just bought their first home and where the monthly premiums are very affordable. In some cases, it can take several years before the insurance premium is what it would’ve been had the client not opted for an age-costed premium.
There is also a choice or guaranteed or reviewable premiums. This has the same concept however, the premiums for the whole term of the policy are guaranteed at a specific monthly payment or reviewed annually. We prefer to recommend guaranteed premiums, so you have the certainty of knowing your monthly premiums.
We would discuss with you what level of income you would like to cover, generally an insurance provider will not cover more than 65% of your gross pre-tax income and also how many months you would be able to manage financially if you were unable to work. We would then work with you to find the most suitable income protection policy.